Tuesday, January 19, 2016

Davos – And the Global One Percenters

Oxfam is a consortium of 17 non-profit organizations, which according to Oxfam America’s Website, is “working to right the wrongs of poverty, hunger, and injustice… in more than 90 countries to create lasting solutions. Oxfam saves lives, develops long-term solutions to poverty, and campaigns for social change.” It is a serious organization taken seriously by just about everyone on earth who matters. Oxfam often issues reports and tells us what we do not want to hear. The gather cold, hard statistics, analyze global trends and examine the reality of our changing world.

“Just 62 people, 53 of them men, own as much wealth as the poorest half of the entire world population and the richest 1 percent own more than the other 99 percent put together, anti-poverty charity Oxfam said on [January 18th]… Significantly, the wealth gap is widening faster than anyone anticipated, with the 1 percent overtaking the rest one year earlier than Oxfam had predicted only a year ago… Rising inequality and a widening trust gap between people and their political leaders are big challenges for the global elite as they converge[d] on Davos [Switzerland] for the annual World Economic Forum.” Reuters, January 18th.

The world has never been fair, but despite modern development, it seems less fair than ever in living memory. Even as global leaders – from the titans of finance and industry, a heavy sampling of Hollywood celebrities to world leaders like U.S. Vice President Joe Biden, its Secretary of State John Kerry, Israeli Prime Minister Benjamin Netanyahu, British Prime Minister David Camera, EU Central Bank PresidentMario Draghiand Canada’s new Prime Minister Justin Trudeau, to name a few – gather in Davos, they already agree that the two greatest issues facing us are global climate change (which impacts poor more than rich) and factionalization, especially accelerating income inequality.

“[The] divisions go far beyond those that exist between the haves and have-nots. In the Middle East, the divide between Shi'ites and Sunnis has reached crisis point, with Iran and Saudi Arabia jostling openly for influence in a region reeling from war and the barbarism of Islamic extremists.

“The conflicts there have spilled over into Europe, causing deep ideological rifts over how to handle the worst refugee crisis since World War Two and - with Britain threatening to leave the European Union - raising doubts about the future of Europe's six-decade push towards ever closer integration.” Reuters.

Bottom line: with increasing frequency and embracing growing numbers of people, vast political constituencies all over the world are rising up against their incumbent leaders, railing against their “establishment,” as the prestigious annual Edelman Trust Barometer reports: “The 2016 Edelman Trust Barometer reveals the largest ever trust gap (12 points) between the informed public and mass population, driven by income inequality and divergent expectations of the future. While trust levels among informed publics are the highest ever in 16 years, trust is below 50 percent for the mass population in over sixty percent of the countries surveyed, having barely moved since the Great Recession. The trust disparity has widened and is now at double digit levels in more than half of the countries surveyed. The U.S. presents the largest divide at nearly 20 points followed by the UK (17 points), France (16 points) and India (16 points).

“‘We are now observing the inequality of trust around the world,’ said Richard Edelman, president and CEO of Edelman. ‘This brings a number of potential consequences including the rise of populist politicians, the blocking of innovation and the onset of protectionism and nativism.’

“The widening gulf is directly linked to income inequality. A double-digit trust gap between high-income and low-income respondents is present in nearly two-thirds of the countries, with the U.S. (31 points), France (29 points) and Brazil (26 points) exhibiting the largest disparities. There are also diminished future expectations among the mass population. In more than two-thirds of the nations surveyed, less than half of the respondents believe they will be better off in five years’ time.” Finance.Yahoo.com, January 18th.

But as revenue rapidly moves from those who labor for a living to those who own the machines that are being built to replace that labor, the world is in more income polarization, perhaps a mega-shock that could shake our political institutions to their core. There are many who believe that our notions of a capitalism mixed with democracy cannot sustain in that future environment, where work is scarce and money is controlled by a rarified few at the top.

“‘The consequence of this is populism – exemplified by [the rise of Donald] Trump and Le Pen,’ Richard Edelman, president and CEO of Edelman, told Reuters, referring to French far-right leader Marine Le Pen, whose National Front has surged ahead of traditional parties in opinion polls.

“The next wave of technological innovation, dubbed the fourth industrial revolution and a focus of the Davos meeting, threatens further social upheaval as many traditional jobs are lost to robots.

“The Oxfam report suggests that global inequality has reached levels not seen in over a century… Last year, the organisation has calculated, [those] 62 individuals had the same wealth as 3.5 billion people, or the bottom half of humanity. The wealth of those 62 people has risen 44 percent, or more than half a trillion dollars, over the past five years, while the wealth of the bottom half has fallen by over a trillion… ‘Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,’ the report says.” Reuters.

“Several recent studies predict a flood of job losses as a result of automation. Forrester Researchsays9.1 million jobs will go in the next decade. McKinseysays45% of paid activities could be automated using ‘currently demonstrated technologies.’ Andresearch from Oxford Universitysays almost half of U.S. jobs are at risk of computerization in the next 20 years. Young people are probably right to be worried about their job prospects, just like the rest of us.” FastCompany.com, January 19th.

Feeling the above “reality,” among the younger demographics, optimism is in short supply. This particularly true in fully-developed, more technologically-driven economies, as a recent Infosys survey indicates: “Withnew artificially intelligent machines appearing every day, young people are worried about whether they'll have a job in the future, a new international survey finds. Across nine countries, more than one-in-four of those aged 16 to 25 believe their job will be done by computer within 10 years.

“While broadly optimistic, the age group recognizes it's entering a job market at a time of upheaval and that constant retraining will be necessary. More than half of respondents in India think computers will replace their jobs, compared to about a third of those in Germany, Brazil, and South Africa, the poll finds. Many respondents think traditional education is unsuited to their future careers: 45% describe academic learning as ‘old fashioned.’

“[The survey]finds that young people in developing markets are generally more positive than those in advanced countries. For example, three-quarters of French respondents say their prospects are worse than their parents (8 in 10 French women said that). But just half of young people in India feel the same way. Sixty percent in India and China say they're ‘optimistic’ or ‘very optimistic’ about the future compared to less than half in Australia.” FastCompany.com. But that’s not the story we are hearing from our leaders on both sides of the aisle.

Are Americans being suckered into a belief that life will get better, incomes will rise and inequality will lessen, when our leaders don’t really share that projection? Exactly which political party has a clear platform to deal with a world in which those who own the labor-replacing machines control both the opportunities and virtually all the global wealth at the expense of just about everyone else? We cannot even deal with bigotry and religious intolerance that defines so many global conflicts today, but perhaps the resulting wars are just reflections of our incapacity to grapple with the harsh economic realities of our economic directions. Isn’t it ironic that the major American spokesman for this alienated American constituency, Donald Trump, is one of those one percenters? Anyone suspicious?

I’m Peter Dekom, and I guess you can ignore all of these statistics if you don’t believe in numbers or if you think God will just come down and make it right.

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Peter's Bio

Peter J. Dekom practices law in Los Angeles and was formerly "of counsel" with Weissmann Wolff Bergman Coleman Grodin & Evall and a partner in the firm of Bloom, Dekom, Hergott and Cook. Mr. Dekom's clients include or have included such Hollywood notables as George Lucas, Paul Haggis, Keenen Ivory Wayans, John Travolta, Ron Howard, Rob Reiner, Andy Davis, Robert Towne and Larry Gordon among many others, as well as corporate clients such as Sears, Roebuck and Co., Pacific Telesis and Japan Victor Corporation (JVC). He has been listed in Forbes among the top 100 lawyers in the United States and in Premiere Magazine as one of the 50 most powerful people in Hollywood .

Mr. Dekom has been a management/marketing consultant, and entrepreneur in the fields of entertainment, Internet, and telecommunications. As a consultant to the state of New Mexico for almost a decade, he was instrumental in creating, writing and implementing legislation to encourage film and television production in the state and supervised the film loan program portion of that incentive structure until the spring of 2011. Mr. Dekom has also provided off-balance sheet, insurance-backed financing for major motion picture studios.

Mr. Dekom served on the board of directors of Imagine Films Entertainment while the company remained publicly traded and was a board member of Will Vinton Studios and Cinebase Software, among others, leaving upon change of ownership. He has also served as a member of the Academy of Television Arts and Sciences and Academy Foundation, Board of Directors, Chairman (now Emeritus) of the American Cinematheque, and on the Advisory Board of the Shanghai International Film Festival. He recently served on the Board of Governors for the America Bar Assn.’s Sports and Entertainment Law Section, where he often authored articles, delivered lectures and continues to be an active participant.

The Beverly Hills Bar Association honored Mr. Dekom as Entertainment Lawyer of the Year in 1994, the Century City Bar Association accorded him the same honor in 2004, and the Family Assistance Program named him Man of the Year in 1992 for his work with the homeless. In 2012, the American Bar Association, through its Forum on Sports and Entertainment Law, honored Mr. Dekom with its highest recognition for entertainment lawyers, the Ed Rubin Service Award. Author of dozens of scholarly articles, Mr. Dekom also is the co-author of Not on My Watch; Hollywood vs. the Future (New Millennium Publishing, 2003) with Peter Sealey and author of Next: Reinventing Media, Marketing and Entertainment (HekaRose Publishing Group 2014). He has served as an adjunct professor in the UCLA Film School, a lecturer (entertainment marketing) at the University of California, Berkeley Haas School of Business as well as being a featured speaker at film festivals, corporations, universities and bar associations all over the world.

Mr. Dekom graduated from Yale in 1968 (BA), and graduated first in his class in 1973 from the UCLA School of Law (JD). He is married to Kelley Choate, an MBA and former art gallery-owner who evolved into a renowned micro-collage artist in her own right. He also has a son, Christopher (b. 1983), who is a Duke University graduate, a Chartered Financial Analyst, a 2013 Darden (UVa) MBA graduate, and is currently an executive with a Los Angeles-based media and entertainment company. Chris' wife, Stephanie (a 2013 George Washington University MD grad), is a neonatal pediatrics 'fellow' at a major Los Angeles hospital